Why cash-strapped Aussies can’t save money
Many Australians are deeply worried about their financial state and some have no savings at all, an alarming new report has found.
The soaring costs of living including rising power bills and petrol prices, no wage growth and record-low interest rates are among the factors being blamed.
Suncorp's Best Saver Report, which polled 1500 Australians, found 34 per cent of Australians were very worried about their financial affairs.
And one in 10 Australians do not save a single cent.
Suncorp's head of consumer spending Chris Fleming said there remained "additional strain on people's ability to save".
He said while record-low interest rates was great for borrowers who were focused on paying off debt, it was detrimental to savers.
"Often there's people who depend on the rates on deposit products and in a lower interest rate environment that pressure is real," Mr Fleming said.
The report also found Australians were more frivolous with cash, racking up additional discretionary spends.
This could include costs such as having a smartphone or using payment options such as buy now, pay later schemes.
"It's going out for dinner more, buying lunch and coffees, all of those things add up across a given week and a month," Mr Fleming said.
"That's why it's important to have a good plan about how people are spending and saving."
Tribeca Financial's chief executive officer Ryan Watson said the hip pocket pain felt by many was the result of spending unnecessarily.
"We live in a consumer-based society where we can become easily attracted to living somebody else's life by making the purchase of a product to live a certain lifestyle," he said.
"This encourages people to spend money they simply don't have."
The report also found being hit with sudden or unexpected expenses and paying off debts were the two most common savings barriers.
And it showed two in five Australians do a monthly manual transaction to their savings account each month to try and successfully save.
Mr Fleming said adopting the 80/20 rule was good approach to become better at saving.
This means using 80 per cent of earnings to cover living expenses and 20 per cent should be saved.
He also urged consumers to be prepared for the most expensive time of year coming up - Christmas.
- Write down a budget.
- Set a goal to save a certain amount each pay cycle.
- Set up a separate bank account to stash savings.
- Start small and set reasonable expectations.
- Avoid using credit.